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Investment Memo:

Dimerix (ASX:DXB)


Opened: 01-Feb-2022

Shares Held at Open: 2,825,000

What does DXB do?

DXB is an early stage biotech research company that is developing an anti-inflammatory drug to treat respiratory and kidney diseases, with potential applications to treat COVID.

What is the macro theme?

Due to the pandemic, biotech and life sciences have been at the forefront of global decision making for investors, governments and ordinary consumers.

What was once an industry that was considered slow and niche is now rapidly evolving with innovation and technology.

Why did we invest in DXB?

Merchant Group Cornerstone Investment

We are following the lead of biotech experts at the Merchant Group, DXB is the first investment in their new early stage biotech fund and they have an excellent track record in the sector.

Phase III Clinical Trials on Rare Kidney Disease

DXB has commenced Phase III clinical trials on patients with a rare kidney disease called FSGS. This disease has 'orphan drug status', which means that DXB is eligible for accelerated approvals by drug regulators.

Clinical trials are a long process, so being eligible for accelerated approvals will save DXB time and money if the drug is proven to be successful at an interim stage.

The prize for a successful FSGS treatment is large, with DXB estimating the market to be more than $1B.

Covid-19 Side Bets

DXB has 2 near-term Covid-19 Phase III studies. If either of these studies are successful then we expect DXB’s share price to significantly re-rate.

Fully Funded

DXB has recently raised $24M at 20c, fully funding its clinical trials for FSGS through to interim results.

Read: Full Breakdown

What do we expect DXB to deliver?

Objective #1: Progress the Phase III Clinical Trial for Rare Kidney Disease (FSGS)

Over the next 12 months we want to see DXB get ethics approval in new jurisdictions and undertake recruitment for Part 1 of its Phase III clinical trial, which will include around 70 patients.


Phase III Study Design Complete

Study Design approved by the FDA

Ethics approvals complete 12/12 countries

Site Setup

First Patient Recruited

Patient Recruitment Updates

72 Patients Recruited

Patient Recruitment Updates

Interim Results Announced

Objective #2: Complete Phase III Clinical Trial to treat COVID-19 hospitalisations (CLARITY 2.0)

We want DXB to provide initial data on whether its treatment can improve respiratory function in hospitalised patients with COVID-19 in a clinical setting. With ethics approval granted in India and Australia, DXB will need to recruit patients and undertake analysis to evaluate the efficacy of its drug.

We want to first see an interim safety analysis of the first 80 patients before DXB continues recruitment for the full 600.

Objective #3: Complete Phase III Clinical Trial to treat pneumonia in patients with COVID-19 (REMAP CAP)

We want DXB to complete its Phase III clinical trial on ICU patients with pneumonia. It is well underway with recruitment and we will be expecting initial results in the first half of 2022. If DXB’s treatment is proven to be effective then we expect the technology to be transferable to other patients with pneumonia not just those caused by COVID-19.

Objective #4: Commence Clinical Trial for Diabetic Kidney [NEW - Updated 08/06/2022]


Clinical trial announced

Finalise clinical trial protocol

Ethics approval secured

Site set-up and initiation

First patient recruited

What could go wrong?

Early Stage Biotech Risk

There are some standard risks that are associated with early stage biotechs that are undertaking clinical research:

  • The drug is ineffective at treating the particular disease (determined by clinical trial results)
  • The drug is not considered safe for human consumption
  • The design of the trial is such that the regulatory body does not approve the drug
  • Patient recruitment is delayed
  • Ethics approval is delayed

Rare Disease Specific Risk

FSGS is a rare disease, this means it could take a long time to find and recruit patients into the clinical trial. To increase the pool of applicants for the clinical trial, DXB will need to recruit from around the globe. Therefore, DXB will need to to secure ethics approval in each new jurisdiction - this takes time and may cause delays.

Commercialisation Risk

Even if DXB’s treatment is successful it will still need to commercialise the drug, which can be difficult if a competitor drug is superior or the landscape of the disease changes (ie. a new strain of COVID-19 emerges that renders the drug ineffective).

What is our investment plan?

In early stage biotech investing, the lead up to initial phase III trial results is where investors can expect to see positive share price action as speculators enter the stock on expectation of a positive result, similar to what we usually see in our exploration stocks prior to long awaited drill results.

Like with all our early stage investments, we invest early and wait patiently for the share price catalyst event, at which point we will look to free carry prior to the result being announced, expecting to sell about 25% of our position on a share price re-rate, holding 75% into the release of results.

Prior to the phase 3 trial results for FSGS we will look to free carry our position if the share price re-rates off the back of either of the COVID treatment results.

Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 2,825,000 DXB shares at the time of writing this memo. S3 Consortium Pty Ltd has been engaged by DXB to share our commentary on the progress of our investment in DXB over time.

Investment Milestones for DXB

Initial Investment: @20c
Top Slice
🔲 Free Carry
🔲 Take Profit
🔲 Price increases 300% from initial entry
🔲 Price increases 500% from initial entry
🔲 Price increases 1000% from initial entry
12 Month Capital Gain Discount
🔲 Hold remaining Position for next 2+ years

Our Past Commentary on Dimerix

Date Title
06-Mar-2023 $ What could commercialisation actually look like for DXB?
15-Dec-2022 $ DXB completes Phase III patient recruitment for crucial interim analysis
03-Dec-2022 $ 0.160 What we are looking for before Christmas...
17-Sep-2022 $ 0.135 Meeting management matters: In person catch ups with GAL, DXB and LRS
02-Sep-2022 $ Pre-result build up? The “big catalyst” in 2023
02-Sep-2022 $ Pre-result build up? The “big catalyst” in 2023
08-Jun-2022 $ Potential new use of DXB’s drug in US$2.5 Billion market
01-Jun-2022 $ DXB Recruits First Patient, Gets FDA IND Approval
01-Jun-2022 $ DXB Recruits First Patient, Gets FDA IND Approval
27-Apr-2022 $ DXB Actively Recruiting Patients Across the Globe, First Dosing Soon
05-Mar-2022 $ 0.195 Mainstream Media Catching on to the Commodities Supercycle
28-Feb-2022 $ DXB: Making Strong Progress on “Main Bet,” Side Bet #2 Paused
28-Feb-2022 $ DXB: Making Strong Progress on “Main Bet,” Side Bet #2 Paused
26-Feb-2022 $ 0.230 The War Begins, Cybersecurity, Food Security, Energy Independence and Precious Metals
12-Feb-2022 $ 0.250 Energy Transition Metals, Raw Materials, McKinsey, Supply and Demand Economics
05-Feb-2022 $ 0.250 The "Lesser Kown" Energy Transition Metals: Copper, Aluminium, Graphite, Helium, Rare Earths
01-Feb-2022 $ Earlier than Expected - DXB Gets First Regulatory Approval in Europe.
01-Feb-2022 $ Earlier than Expected - DXB Gets First Regulatory Approval in Europe.
14-Jan-2022 $ 0.275 How do Fund Managers Invest in Small Cap Stocks?
18-Dec-2021 $ 0.235 Investing 101: Taking Stock of your Stocks and Diversification
27-Nov-2021 $ 0.245 New COVID strain, Santa Rally, Market Thoughts
30-Oct-2021 $ 0.265 The fallout from the VUL short attack explained
25-Oct-2021 $ 0.280 Lockdown lifts, Two stocks to watch: MNB and ONE
21-Oct-2021 $ DXB kidney disease treatment Phase III trial officially begins
16-Oct-2021 $ 0.285 Mainstream media casts a big spotlight on Green Hydrogen
15-Oct-2021 $ DXB to run a Phase III COVID-19 Study in Australia
02-Oct-2021 $ 0.310 Evergrand, Gold and Traditional Energy
27-Sep-2021 $ 0.315 DXB announces approval for Phase III COVID-19 trials
25-Sep-2021 $ 0.315 Managing a market crash - lessons from March 2020
24-Sep-2021 $ 0.300 DXB announces approval for Phase III COVID-19 trials in India
18-Sep-2021 $ 0.280 Why uranium stocks are soaring, one good movie recommendation
04-Sep-2021 $ 0.350 Annual Reports, Uranium and a Welcome to New Subscribers
28-Aug-2021 $ 0.325 Recap of the KNI IPO and share price run
26-Aug-2021 $ 0.320 DXB kicks off Phase 3 clinical trials - Ethics approval lodged
21-Aug-2021 $ 0.315 Market fluctuations and portfolio news and quick takes
16-Aug-2021 $ 0.400 Introducing: Our Biotech Pick of the Year 2021
16-Aug-2021 $ 0.400 The first investment in our new early stage, ASX listed biotech portfolio